OIL AND GAS:

Battle rages over pipeline rules that can cost a bundle to read

The beleaguered federal agency that oversees oil and gas pipelines meets today to consider lobbying push-back against congressional orders that it stop charging the public up to $995 to read one of its industry-developed safety standards.

At issue is a little-known government practice called "incorporation by reference," the inclusion of lengthy industry standards into federal laws without publishing their full text. So anyone who wants a copy must pay a hefty fee.

Such shorthand appears in an array of regulations, but its use in oil and gas law ignited controversy after the 2010 Gulf of Mexico oil spill, when President Obama vowed to stiffen supervision of offshore drilling and the American Petroleum Institute agreed to make public dozens of rules that it developed.

Yet when it comes to the nation's 2.5 million-plus miles of oil and gas lines, which saw three high-profile leaks between 2010 and 2011, the Pipeline and Hazardous Materials Safety Administration (PHMSA) continues to omit from its books an estimated 60 industry standards that have the force of law.

Congress told PHMSA in last year's pipeline safety bill to publish for free all of its pay-to-read rules -- which cost more than $2,000 in total, according to safety advocates -- but the groups that write those standards are urging lawmakers to reconsider a transparency mandate that they say could cost them dearly.

PHMSA is bringing industry and safety advocates to the table today -- three days after the National Transportation Safety Board (NTSB) blasted its weak regulations in a report on the Michigan pipeline leak that spilled 800,000 gallons of crude in 2010 -- to craft a compromise on expanding access to the safety standards.

The agency's official announcement of today's workshop, however, listed 14 concerns from the underfunded oil and gas pipeline police force. If Congress' mandate is carried out, PHMSA warned, the agency may be forced to "write its own standards."

Carl Weimer, chief of the public-interest nonprofit Pipeline Safety Trust, voiced concern that the goal of today's effort is to "get Congress to make this go away." Yet Weimer was not without sympathy for the agency where he serves as an outside adviser.

"I feel for PHMSA," he said in an interview. "They're really underfunded and understaffed. That's not an excuse just to let industry write your rules for you."

'Best practices' or 'perverted'?

The energy industry hails the use of standards in federal laws as a way to oversee highly complicated oil and gas operations without constraining technological advancement or compromising effectiveness.

"The know-how and expertise of technical people in the industry is very hard to replicate on a government staff, no matter how hard they try," Association of Oil Pipe Lines President Andy Black, whose group does not set the standards at issue, said in an interview. "Making an industry standard into a regulation helps safety, because it turns best practices into a requirement for all operators."

But Richard Kuprewicz, a pipeline expert who also advises PHMSA, warned that as oil and gas standards become longer and more convoluted, their effectiveness evaporates.

"Attorneys for companies have perverted regulations and industry standards to the point that they have violated the intent," said Kuprewicz, who reviewed Pacific Gas & Electric Co.'s safety plan on behalf of consumers following a fatal California blast in 2010.

"That's got to stop. And if industry standards cannot be reviewed by the public before they are incorporated into safety regulations, they need to be removed."

The standards adopted into PHMSA rules for pipeline operators can be technical, such as "integrity management" rules that the NTSB on Tuesday urged the agency to look at strengthening following its investigation of the 2010 oil spill in Marshall, Mich.

But one standard that Weimer's group sees as an example of a runaway process deals with a universal concept: how pipeline companies should communicate with the public, including emergency responders who work on spill cleanups.

PHMSA adopted an American Petroleum Institute standard in 2005 as its rules for public awareness. That 70-page document is free to the public but cannot be printed or downloaded, because of a pact API reached with the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) to stop charging for its standards four months after the Gulf of Mexico oil spill began.

API "deserves credit" for allowing access to its standards, Pipeline Safety Trust wrote in a recent letter to the Federal Register on its practice of allowing industry-written references in U.S. law.

Still, the trust added, the API-written public awareness standard is "not prescriptive, nor is it realistically enforceable."

The independent NTSB slammed the public awareness program developed by Enbridge Inc., the company whose pipe spilled heavy Canadian crude in 2010's Michigan leak, as part of "organizational failures that resulted in the accident and increased its severity." Had Enbridge better educated first responders, NTSB said, they might have detected the gushing oil before the disaster got worse.

Case for charging

However loudly outside pipeline experts warn that reliance on incorporated standards risks perpetuating a climate of industry self-regulation, no matter the hundreds of millions of dollars it saves each year, PHMSA's meeting today is not focused on whether to curb the government's use of the practice.

Rather, the agency is considering a plea from nine standard-setting organizations -- including the American societies of mechanical and civil engineers -- to roll back a section of Congress' bipartisan pipeline safety bill that they say amounts to "nullifying the value of [their] intellectual property."

If forced to stop charging the public for industry standards, the engineers and fellow technical experts wrote to lawmakers in January, they would face a "dilemma" of consenting to a copyright infringement or preventing the government from using their documents.

Weimer challenged the notion that the venerated engineering organizations would face major financial hardship if deprived of the chance to sell copies of standards to the small number of Americans who would be interested. API's compromise with BOEMRE, he said, suggests that change is possible for others.

"I'm really sorry if these organizations are setting up this business model," he said, "but isn't it right for the public to be able to see what's in their own laws?"

Twenty legal professors and lawyers, led by administrative law scholar and former Nuclear Regulatory Commission General Counsel Peter Strauss, backed the Pipeline Safety Trust's case in a petition to the Federal Register this year that called for broader free access to industry standards across all of government, not just PHMSA.

"Free availability to the affected public of incorporated [industry standards] is of particular importance," the legal experts wrote, "when those materials create mandatory obligations whose violation could have adverse consequences."

Federal regulations, they added, should be brought into "the Information Age."

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